Kenya's business community faced significant uncertainty and risk during the 2017 election period, as electoral polarization and the subsequent Supreme Court nullification created extended periods of political crisis that threatened macroeconomic stability, investor confidence, and business operations. The business community's response to the election cycle revealed the interconnections between electoral politics and Kenya's economic trajectory and the ways in which political uncertainty could cascade into economic impacts.
During the campaign period preceding August 8, business confidence declined as investors expressed concern about the polarized electoral environment and uncertainty regarding the election's conduct and outcomes. Some multinational corporations and foreign investors adopted wait-and-see postures, deferring investment decisions until the election outcome became clear. The Nairobi Securities Exchange experienced volatility as traders responded to electoral uncertainty, with stock prices fluctuating based on perceptions of which candidate victory would prove economically favorable.
The business community had interests in both electoral outcomes, though with different emphases. Large-scale exporters and agricultural producers were concerned with macroeconomic stability and institutional continuity that would ensure predictable operating environments and trade relationships. These business actors had interests in electoral outcomes that would maintain economic policy continuity and would avoid major policy disruptions. The incumbent Jubilee government's focus on infrastructure development and macroeconomic stability had generated business community support, creating alignment between large business interests and the Jubilee coalition.
However, some business actors expressed concern about corruption allegations targeting the Jubilee government and about institutional degradation that might result from continued Jubilee rule. Small and medium-sized enterprises, in particular, expressed concern about corruption affecting their ability to compete for government contracts and access credit. These businesses viewed opposition victory as potentially beneficial to the extent that it would involve institutional reform and reduced corruption.
The August 8 election results, while showing Jubilee victory and suggesting electoral clarity, did not immediately resolve business uncertainty. The narrow outcome in some respects (54% victory margin), combined with opposition claims of irregularity, meant that business actors could not be fully confident in the durability of the electoral outcome and the certainty that business planning could assume.
The Supreme Court's September 1 nullification decision triggered acute business crisis. The dramatic assertion of judicial authority to overturn an election created uncertainty about what the second election's outcome would be and whether judicial institutions would again overturn electoral results if they deemed procedures deficient. This institutional uncertainty was particularly concerning to business actors accustomed to predictable governmental environments. Some business leaders expressed concern that the nullification decision, while constitutionally defensible, created precedents that might make future electoral outcomes unpredictable.
The period between the September 1 nullification and the October 26 re-run was characterized by escalated business caution. Foreign investors particularly expressed concern about political instability and questioned whether Kenya remained a stable investment destination. Some foreign companies relocated personnel or paused operations pending clarity on the political situation. The Nairobi Securities Exchange experienced trading suspensions during periods of heightened political tension, and the Kenyan shilling depreciated against major currencies as investors reduced exposure to Kenya.
The political violence accompanying the post-August-8 period also affected business operations, particularly in opposition stronghold regions. Businesses in areas experiencing ethnic violence or political unrest faced operational disruptions, security challenges, and reduced customer demand. Some businesses temporarily closed operations or relocated staff in response to security concerns. The violence thus created localized economic impacts alongside its human costs.
The opposition boycott of the October 26 re-run created mixed business reactions. Some business actors viewed the boycott as politically irresponsible and hoped that the re-run would provide electoral clarity enabling resumed normal business operations. Other business actors expressed concern that the boycotted election lacked legitimacy and that the resulting government would lack sufficient political support to implement stable economic policy. The low October turnout and opposition absence meant that the October result, while appearing numerically decisive, provided less political legitimacy than the August result had offered, leaving business actors uncertain about the longevity of the government's political base.
The post-October election period gradually saw business normalization, though with persistent caution. By early 2018, business activity resumed more normalized patterns, though with attention to ongoing political risks. The March 2018 handshake between Uhuru and Raila significantly improved business confidence by resolving political uncertainty and suggesting that political tensions would ease. The reconciliation's signal that elite political actors could cooperate despite electoral rivalry helped restore confidence that Kenya could achieve political stability despite electoral upheaval.
The 2017 election's impact on Kenya's business environment demonstrated the interconnections between political stability and economic activity. The extended election crisis, while ultimately resolved through elite negotiation rather than through institutional breakdown, had tangible economic costs. Delayed investments, reduced business activity, foreign investor departures, and constrained credit availability during the crisis period contributed to slower economic growth during 2017 and early 2018 compared to previous years.
See Also
2017 Election 2017 Election August 8 Vote 2017 Election October Re-run 2017 Election Supreme Court Nullification 2017 Election Handshake Prelude
Sources
- Central Bank of Kenya. (2017). Monetary Policy and the 2017 Election Crisis. Retrieved from https://www.centralbank.go.ke/
- Kenya Private Sector Alliance. (2017). Business Community Response to the 2017 Electoral Crisis. Retrieved from https://www.kepsa.or.ke/
- World Bank. (2017). Kenya Economic Update: Electoral Uncertainty and Growth Impacts. Retrieved from https://www.worldbank.org/